The amendment to the Act on Credit Managers and Credit Purchasers, which came into effect on June 1, 2024, brings fundamental changes in the area of management and purchase of non-performing loans provided by credit institutions. These changes will have a significant impact on credit administrators and purchasers, i.e. collection agencies, particularly in terms of obtaining the license required to perform this activity.
On June 1, 2024, a new law, No. 106/2024 Coll., on credit administrators and credit purchasers and on amendments to certain laws, came into effect.
loan purchasers and amending certain laws came into effect. This law introduces fundamental changes in the area of management and purchase of non-performing loans provided by credit institutions, which will have a significant impact on loan administrators and purchasers, i.e. collection agencies, particularly in terms of obtaining the license required to perform this activity.
The management and purchase of non-performing loans is a specific area of the financial market that involves the management and recovery of loans that are not repaid in accordance with the agreed terms. Non-performing loans can pose a risk to financial institutions, but at the same time offer investment opportunities for companies specializing in their management and recovery.
Purpose of the new law
The main objective of the new law is to effectively address the problem of non-performing loans and to promote the development of secondary markets for non-performing loans within the European Union (EU). The law reflects Directive (EU) 2021/2167 of the European Parliament and of the Council, which lays down common rules for the management and purchase of non-performing loans.
Who is affected by the new law?
The new Act No. 106/2024 Coll. on credit servicers and credit purchasers affects several
entities involved in the management and purchase of non-performing loans. Specifically, these are:
1.) Credit servicers
- Legal entities that, as part of their business activities, manage and enforce rights and obligations related to the rights of creditors in connection with an unpaid loan agreement or the unpaid loan agreement itself on behalf of a loan purchaser and perform loan management.
- Administrators must obtain a license from the National Bank of Slovakia (NBS) to perform this activity.
2.) Credit purchasers
- Entities other than credit institutions which, as part of their commercial, business or professional activities, acquire, for consideration, the transferred rights of a creditor in relation to a defaulted credit agreement or the defaulted credit agreement itself.
3.) Credit service providers
- Persons or companies that perform certain activities related to credit management on the basis of a contract with a credit manager. These entities may perform only some of these activities, but not all of them.
4.) Credit institutions
- Banks and other financial institutions that provide loans and may decide to sell defaulted loans to credit servicers or credit purchasers.
5.) Debtors
- Natural persons and legal entities that have defaulted loans and whose receivables will be managed or sold under the new law.
6.) Regulatory authorities
- National Bank of Slovakia (NBS), which is responsible for granting licenses, supervising the management and purchase of loans, and ensuring compliance with the new law.
7.) Cross-border credit servicers and purchasers
- Foreign entities wishing to manage or purchase non-performing loans in Slovakia under the freedom to provide services or through a branch.
Obligations of collection agencies under the new law
Collection agencies must now obtain a license from the National Bank of Slovakia. The new law sets out specific conditions for granting this license, including obligations towards debtors, management duties, and rules for cross-border activities. A person who is already engaged in credit management in the Slovak Republic as of June 1, 2024, may continue to do so without a license until November 30, 2024. If such a person manages unpaid loans after that date without a license, the National Bank of Slovakia may impose a fine of up to EUR 200,000.
How to obtain a license for a collection agency?
To obtain a license, the following conditions must be met:
- Submission of an application - The applicant must submit a complete application for a license to the National Bank of Slovakia.
- Documentation - Attach all necessary documents, including proof of professional knowledge and experience in the field of credit management.
- Compliance with the law - The applicant must prove that their activities will be in accordance with the new law and relevant regulations.
Other legal provisions:
The new law also defines:
- Legal relations between credit managers and credit purchasers
- Conditions for withdrawal of authorisation
- Protection of debtors' rights
- Supervision and sanctions
Legal assistance in obtaining a license
In order to obtain a license for a credit manager, we recommend using the services of our law firm Hronček & Partners. Our law firm has extensive experience in representing clients in licensing proceedings before the National Bank of Slovakia. We will provide you with the necessary legal advice and effectively assist you in preparing all the necessary documents and forms for submitting an application for a credit manager license, as well as representing you before the National Bank of Slovakia in the licensing proceedings themselves. We ensure communication with the relevant regulatory authorities and resolve all legal issues that may arise during this process.
If you are interested in our services or require further information, please do not hesitate to contact us via the contact form or at the following email address: info@legalfirm.sk
